The FATF has stated that although Nepal has been given two years to come out of the 'Grey List' and an action plan has been prepared for it, the implementation has not been effective.
What you should know
The Financial Action Task Force (FATF), an international organization that monitors money laundering and terrorist activities, has pointed out that Nepal's efforts to exit the 'Grey List' are insufficient.
Nepal has been given two years to exit the ‘Grey List’ and an action plan has been prepared for it, but the implementation has not been effective, the FATF has said.
According to a statement issued after the fourth plenary meeting of the FATF held on Friday, Nepal has continued its reform efforts, but they are still insufficient and further improvements are needed. Nepal had made a high-level political commitment to the FATF and the Asia Pacific Group (APG) in February 2025 to strengthen the effectiveness of its anti-money laundering system. The FATF has pointed out that although the path taken by Nepal to exit the ‘Grey List’ is correct, its efforts are not sufficient and should be accelerated. The FATF has suggested seven points for Nepal to exit the ‘Grey List’ within the specified time.
These are the seven points of the FATF’s directive
1) Improve the understanding of money laundering/terrorist financing risks and expand their scope.
2) Effective risk-based monitoring of banks and financial institutions, high-risk cooperatives, casinos, dealers in precious metals and stones (DPMS) and real estate sectors should be implemented.
3) Effective regulation and action should be taken against illegal service providers such as hundi that do not hinder financial inclusion.
4) Establish a strong authority to investigate money laundering, enhance capacity and coordinate.
5) Increase the number of investigations and prosecutions related to money laundering.
6) Effective implementation of procedures for identifying, monitoring, freezing, confiscating and, if necessary, confiscating/seizing criminal proceeds and assets used in criminal transactions, in accordance with the risk profile.
7) Effective implementation of directives issued by regulatory bodies to prevent financial investment in terrorist activities and the manufacture and transportation of destructive weapons.
